PC Connection, Inc.

About PC Connection, Inc.

You won't see a store on every street corner, but PC Connection is just a click away. A leading direct marketer of computer products in the US, the company sells hardware, software, networking devices, and peripherals. It offers more than 300,000 items from manufacturers such as Apple, Hewlett-Packard, and Microsoft. PC Connection also provides a range of IT services. Through its catalogs, websites, and direct sales force, PC Connection targets small and midsized businesses, large corporations, government agencies, and educational institutions, as well as individual consumers. PC Connection was founded in 1982 by chairman Patricia Gallup and director David Hall.

Operations

PC Connection owns four sales companies, each of which has the ability to deliver custom-configured computer systems overnight. Small and midsized businesses (SMB) are PC Connection's largest customer segment, typically accounting for more than 40% of sales. SMB customers are served by the company's PC Connection Sales subsidiary. Large corporate accounts, handled by PC Connection's MoreDirect subsidiary, generate about 35% of revenues. Public sector customers (including government agencies and educational institutions) contribute just over 20% of sales and are served by PC Connection's GovConnection subsidiary.

PC Connection connects with customers through direct marketing channels, including telemarketing and field sales, Internet sales through its four e-commerce sites, and inbound telesales. The online retailer reported advertising expenses of $16 million, $18 million, and about $20 million in 2014, 2013, and 2012, respectively.

Financial Performance

PC Connection's sales increased for the fifth consecutive year in 2014, to about $2.5 billion, an all-time high for the company. Net income also continued to climb, rising to $42.7 million in 2014 from $36.7 million in 2013. Sales in 2014 were propelled by increasing demand from small and medium business customers and by large customers seeking PC Connection's technical services. A rush of customers getting help before the expiration of support for the Windows XP operating system in April 2014 also pushed revenue higher.

Strategy

PC Connection is focused on maintaining strong customer relations by providing good service. About 90% of sales are made to repeat customers each year. The company acquires products for resale both directly from manufacturers and increasingly indirectly through distributors and other sources. The five vendors supplying the greatest amount of goods accounted for 61% of total product purchases in 2013. They included Hewlett-Packard (22%), Ingram (25%), Synnex Corp. (12%), and Tech Data., 8%

Looking beyond hardware and software sales, PC Connection is emphasizing service offerings that are geared to business customers. Its ProConnection services division helps companies with IT lifecycle management, software services, and optimizing servers, storage, and networks. The company is even offering services for companies moving their computing resources to the cloud.

In an effort to address increasing international demands, PC Connections formed an alliance with Bechtle AG, a European IT service provider.